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Mike: Content providers adapt too – $NFLX

By - - Equities on June 10, 2015 8:04 PM Follow-Ups MikeInitial

Let’s break this down into two parts shall we? Content and distribution.

On the distribution side their offering was essentially unique, but that is no longer true. Content is now on demand pure and simple, they have subs, they have growth, they have scale. Everyone i know subscribes, but subscription services are, ultimately, utilities. They knew it too, so to avoid being squeezed they needed their own content…

On the content side the model was disruptive because it was run entirely by creatives, it had to be because no prior infrastructure existed; no management insisting that the Brady Bunch was what America wants, and what they could sell to sponsors. Here’s some $$, go make a show!

Ultimately content providers adapt too, and start selling what customers want. Netflix will need to remain vigilant to avoid falling into a bureaucratic morass where they are more like other content providers even as their competitors become more creative, like Netflix has been (again out of necessity).

So where does that leave us? Barriers to entry. The premium afforded to Netflix is that given to the first to market and management. Do they deserve it? I thought iPods were an mp3 player, not THE mp3 player. A phone? The phone? Iphone! Is Netflix the Apple of their space? Is this their market to lose? No one’s peeking through your window to see what on-demand and streaming services you use. There’s no “cool” factor, no aluminum case and sapphire, and so far no ecosystem.

Do I subscribe for their content? Only while its good, and it is hard to remain fresh (sorry everyone, I’m referring to myself as well).

What multiple do utilities deserve? Or content providers?

And if they become the ONLY utility? Will SNL have skits about Ma-Netflix? Doesn’t really roll off Tomlin’s tongue does it.

I wouldn’t short this into a split (oh hell no!), but not wanting to short is not the same as wanting to buy. I’ve seen this stock fall 70%, I’m guessing the next time it does it won’t more than double the prior high.

0 Follow-Ups

Dan: $NFLX – It’s Different this Time :)

By - - Equities on June 10, 2015 1:51 PM 2 Follow-Ups DanInitial Last night on CNBC's Fast Money we discussed the merits of Netflix's bounce in anticipation of a stock split. I think regular viewers of the show know where I stand on this sort of stuff, it's almost entirely nonsense but often becomes a self fulfilling prophecy. The assumption is when a cult stock ... Read More →

BK: Take profits in $NFLX without hesitation.

By - - Equities on June 11, 2015 8:40 AM 0 Follow-Ups BKInitial I couldn't agree more with Dan about the NFLX move to all time highs on a stock split - this is the most absurd reason to invest in a stock. But hey, dumber strategies have worked. My view on Netflix was that once HBO went over the top the NFLX business model was broken. I thought competition wou... Read More →
This is Part 2 of a 3 part Debate on Equities